Potential signal:
- I am a buyer of this market in small bits and pieces, every $1,000 it drops.
- I would have a stop at $105,000 below, and aim for $120,000 above.
Bitcoin rallied above $16,000 on Monday before pulling back, forming what appears to be a developing W pattern. Key support sits near $110,000 with resistance at $120,000, as broader risk sentiment continues to drive short-term direction.
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During the trading session on Monday, the Bitcoin market rallied quite nicely to break above the $16,000 level only to turn around and show signs of negativity. It's probably worth noting that the Bitcoin market is now starting to form a massive W pattern. And of course, Bitcoin has broken above the crucial 50-day EMA.
Risk Appetite is Important Here
That being said, this is also a market that is going to be very sensitive to risk appetite, and the weekend, of course, has seen quite a bit of risk appetite fuel as the United States and China have at least agreed in theory to a framework of a trading agreement. If that does in fact come into play, then a lot of risk appetite will return to various markets, including Bitcoin, although it's not directly influenced by this.
It's also worth noting that stock indices have been very strong and especially the NASDAQ, which has a correlation to Bitcoin. If Bitcoin falls from here, the $110,000 level ends up being a bit of a support level right along with the 200-day EMA, which is just above the $108,000 level. To the upside, the $120,000 level is an area that I think a lot of people will be watching. And breaking above there opens up a move to the $125,000 level. Bitcoin has essentially been flat for a while, and that is something that you need to pay close attention to, but it's worth noting that at least the 200-day EMA has shown itself to be important and to be supported. And that, of course, in and of itself, tells you that at least at this point, Bitcoin has no interest in falling apart.
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